Euro: USD/EUR (EUR=X) suggests a range might play out
The trade-weighted US dollar index (DXY) is trying to post a second consecutive day of gains. DXY caught a bid after testing its 200-day moving average on Friday. Most of the major currencies are in the red in the early week as a result of the dollar bounce. The exceptions are the antipodean currencies.
There is some clear overhead resistance in play for DXY. The index is currently testing its 100-day moving average. Slightly above it, the 50-day moving average comes in play to offer further resistance.
The upside dollar resistance and range support in EUR/USD suggests a range might play out.
On the fundamental side, a similar conclusion can be made. Last week, it was Fed Chair Powell that triggered a broadly weaker dollar from a testimony that was perceived to be more dovish than expected.
The markets will look to incoming data to further assess easing potential at the Fed meeting that will take place at the end of the month. I think the most influential data release is the first release of second quarter GDP. Perhaps until then, we may see a continued slowing of momentum in EUR/USD and the dollar pairs.
Also, as mentioned in yesterdays’ forecast, I think the excitement from Powell’s testimony will fade a bit in the new week. The rationale behind this is because it looks like the futures markets are once again getting ahead of themselves in pricing in aggressive easing later this month. The odds of a 50 basis point cut was last seen increasing to a 1 in 3 chance.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 1.13.
The projected lower bound is: 1.11.
The projected closing price is: 1.12.
During the past 10 bars, there have been 4 white candles and 5 black candles for a net of 1 black candles. During the past 50 bars, there have been 24 white candles and 25 black candles for a net of 1 black candles.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 31.5592. This is not an overbought or oversold reading. The last signal was a buy 5 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 42.07. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 239 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -101.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 5 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 11 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed unchanged at 1.121. Volume was 98% below average (consolidating) and Bollinger Bands were 23% wider than normal.
Open High Low Close Volume___
1.121 1.121 1.121 1.121 1,589
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.12 1.12 1.13
Volatility: 5 6 7
Volume: 65,657 82,251 124,899
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX EUR= is currently 1.0% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of EUR= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on EUR= and have had this outlook for the last 6 periods.